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06-01-2020

Embracing Behavioral Science: A New Year’s Resolution for Businesses

As January arrives, we often find ourselves focused on annual resolutions. And quite often, many of our self-improvement goals (living healthier, saving more, reducing impact, etc.) sound familiar, as we’ve made them before and failed to follow-through.  

Indeed, New Year’s Resolutions are a clear illustration of the gap between intent and action – and the difficulty in breaking our well-established habits. Simply knowing what to do differently is rarely enough, but Behavioral Science teaches us that small changes (in our physical environment and our daily routines) can make a big difference in our behavior.  In fact, Wendy Wood’s Good Habits, Bad Habits: The Science of Making Positive Changes that Stick is highly-recommended reading for those struggling to turn their New Year’s resolutions into lasting changes.   

Of course, change is also very difficult, but equally necessary, for large organizations.  Like individuals, companies need to break established habits in order to adapt, improve and prosper. So what should a New Year’s Resolution look like for a business?

Surely, a resolution should involve more than aiming for slightly higher revenues, margins and profits in the coming year.  In these challenging times of political polarization and climate-crisis, we’d expect companies to push themselves harder to pursue sustainable business models. Here, we refer to sustainability in a broader sense, in terms of designing organisations to thrive for many generations, by serving the long-term needs of all stakeholders (and the broader society).  

Some business leaders mistakenly assume that ‘sustainability’ inevitably requires breakthrough innovation and/or fundamental overhauls in strategy and incentive structures.  But there is also lower-hanging fruit to be harvested, by directly addressing the ‘intent-action gap’ and helping people achieve their desired goals (i.e. their New Year’s resolutions, so to speak). While this vision may sound idealistic or simplistic, there are actually very clear and accessible opportunities across all business sectors.

  • In Financial Services, businesses can better help investors to save money and plan properly
  • In Consumer Goods, marketers can assist shoppers in making healthier food choices and/or limiting their consumption (portion control)
  • In Health Care, organizations can help ensure that patients take their medicines as directed
  • In Hospitality, hotels can help guests to conserve energy and reduce waste

In these examples (and many more), we find potential ‘win-win-win’ scenarios that can benefit businesses, their customers and society. In each, we also see the opportunity to apply Behavioral Science for good, as these situations require changes in human behavior, rather than new technology.  In fact, they are all areas in which we’ve seen that small, low-cost interventions (such as defaults, reminder systems and visual design)can nudge people towards better decisions and desired outcomes.  

Importantly, this is not just the right thing to do: It is a formula for success in a changing world, in which people are increasingly looking for meaning, purpose and connection. Both academic research and common sense suggest that: 

  • Customers will form deeper relationships with companies that actively help them reach their underlying personal goals;
  • Employees will feel more engaged and loyal to organizations that clearly serve a deeper purpose

So as we turn to a new year (and enter a new decade), our own resolution is to help more businesses recognize their own self-interest, embrace a new vision – and employ Behavioral Science as a catalyst to drive the changes needed for long-term sustainability.

Scott Young

Senior Vice-President BVA Nudge Unit UK / scott.young@bva-group.com

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